Private Equity Capital Briefing

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February 2017

Private Equity Capital Briefing

Monthly insights and intelligence on PE trends

PE off to a strong start

in 2017

January marks the most active

start to a year for PE since the

financial crisis

The better the question. The better the answer.

The better the world works.


The Private Equity Capital

Briefing has been designed to

help you remain current on

capital market trends. It

captures key insights from

subject-matter professionals

across EY and distills this

intelligence into a succinct

and user-friendly publication.

Private Equity Capital Briefing

provides perspectives on both

recent developments and the

longer-term outlook for

private equity (PE)

fundraising, acquisitions and

exits, as well as trends in

global M&A, cross-border deal

flows, IPOs and the debt and

bond markets.

Please feel free to reach out

to any of the subject-matter

contacts listed on the back

page of this document if you

wish to discuss any of the

topics covered.


Contents

Section 1 Private equity: fundraising 4

Private equity: acquisitions 5

Private equity: exits 6

Section 2 M&A 7

Section 3 IPOs 9

Section 4 Loans 10

Section 5 Bonds 11

Appendices

Appendix A PE activity by geography 13

Appendix B M&A activity monthly flash 22

Appendix C M&A multiples and bid premium 23

Appendix D Capital Confidence Barometer 24


1.i. Private equity: fundraising

Executive summary

• After a robust year for PE fundraising in 2016, firms are off to a strong start in the New Year. PE firms closed funds valued at

US$45b in January, up 78% from the US$25b raised last year.

• Infrastructure funds were particularly well represented amongst funds that closed in January, accounting for half of the total.

• The average fund size exceeded US$1b in January, compared with US$650m for the full year 2016.

Current state

Fundraising

• After a robust year for PE fundraising in 2016, firms are off to a strong

start in the New Year. PE firms closed funds valued at US$45b in

January, up 78% from the US$25b raised last year.

• Infrastructure funds were particularly well represented among funds

that closed in January, accounting for half of the total by value. The

sector has seen significant interest from investors in recent years from

investors looking for stable returns over time and the ability to deploy

large amounts of capital. The election of Donald Trump in the US has

accelerated interest, after the administration signaled that spending on

infrastructure investments will be a priority. Indeed, several of the

world’s largest alternative asset managers have recently announced

plans to add funds in the space, suggesting that 2017 could be a record

year for fundraising.

• The handful of closing s by a number of large infrastructure funds

pushed average fund sizes past the US$1b mark in January, compared

with US$650m in the full year 2016. Funds have been trending larger as

LPs seek to put greater amounts of assets to work in PE and other

alternative investments.

Global PE infrastructure fundraising by year (in US$b)

$70

$60

$50

$40

$30

$20

$10

$0

Global PE fundraising by month, LTM (in US$b)

$140

$120

$100

$80

$60

$40

$20

$0

Source: Preqin

Commitments

No. of funds

Jan Feb Mar Apr May Jun Jul Aug Seep Oct Nov Dec Jan

Average fund sizes over time (in US$m)

$1,200

$1,000

$800

$600

$400

$200

$0

Source: Preqin

Time to close by fund type (in months)

100

80

60

40

20

0

Source: Preqin

Source: Preqin

12

17 17

15

19

Environment and horizon

• PE firms are raising capital faster than they have in the past. According

to Preqin, the average PE fund in 2016 spent 16 months between

launch and final close, down from 17 months in 2015, and 18 months in

2013. Buyout and infrastructure funds have seen the strongest

demand, closing in 12 months and 15 months, respectively.

• Currently there are more than 2,800 funds in the market, seeking an

aggregate US$1t. Buyout accounts for the largest share, with roughly

300 funds seeking US$225b, followed by real estate and secondaries

funds.

• “Core” PE funds, or funds which are designed to invest and hold

companies over a much longer period are seeing interest from certain

segments of investors. While some large traditional LPs are wary of

sacrificing liquidity and the ability to be nimble/opportunistic without

sufficient return, for the right LPs—family offices that want fewer

taxable events, SWFs with ultra-low cost of capital and long time

frames—they solve a significant issue and can be a good fit.

• Consolidation in the PE industry has been ongoing for some time, with

LPs seeking to invest greater amounts with smaller number of

managers. CalPERS’ private equity consultant recently disclosed that

the pension had completed the sale of 26 partnership interests with a

value of more than US$420b, following up a similar sale in the first half

of last year. At that time, CalPERS’ ambition was to reduce the number

of managers to less than 120, from a high several years ago of roughly

400.

Source: Preqin

Buyout Growth Real estate Infra Distressed

Source: Preqin

PE funds in the market by type and target (in US$b)

Commitments

No. of funds

$1,200

250

$1,000

200

$800

150

$600

$400

100

$200

50

$0

0

Source: Preqin

Source: Preqin

4 Private Equity Capital Briefing


1.ii. Private equity: acquisitions

Executive summary

• While January typically represents a quiet month for PE acquisitions, it was the most active start to a year since the financial

crisis.

• PE firms announced 84 deals valued at US$16.1b during the month.

• Active sectors continued 2016’s trend, with large deals announced in Health care, Consumer Products and Technology.

Current state

• January typically represents a quiet month for PE acquisitions. Firms

announced 84 deals valued at US$16.1b during the month, a decline

of 58% by value from December. However, it nonetheless represented

the most active start to a year since the financial crisis. Activity was

spread across a range of geographies and sectors; there were six

deals valued at more than US$1b, while active sectors continued

2016’s trend, with large deals announced in Health care, Consumer

Products and Technology.

• Deal activity increased across all regions in January versus the same

period a year ago:

• The Americas saw 38 deals valued at US$7.8b, up 77%

from a year ago.

• EMEA saw 39 deals valued at US$4.5b, up more than

150% from a year ago.

• Asia-Pacific saw 7 deals valued at US$3.8b, up 48% from a

year ago.

Environment and horizon

• With valuations still at elevated levels, PE firms remain challenged to

deploy assets in ways that leave headroom for growth. According to

S&P Leveraged Commentary and Data, average purchase multiples

closed 2016 at 10.0x in both Europe and the US, which is above the

levels seen during the 2006-2007 period. As a result, many firms are

underwriting limited multiple expansion into current acquisitions (or

even multiple compression in certain industries), and instead are

relying on operational improvements and value creation techniques to

drive returns. Industry participants say that maintaining discipline,

sticking to core competencies, and being able to clearly articulate a

firm’s particular competitive advantage relative to a deal is now more

important than ever.

• PE investment in the real estate sector could see continued interest in

2017, despite concerns of high prices and political uncertainty over

the direction of trade agreements. The appetite for the asset class

shows little sign of abating, according to EY’s 2017 Global market

outlook: trends in real estate private equity. The report reviews

various regions and where they are in the business cycle, stating that

while investors have an appetite for US real estate, they are cautious

because of expected interest rate rises. The Southeast Asian real

estate market looks set for increased activity over the latter half of

2017. The report also notes that in many ways, investors are viewing

Germany as Europe’s safe haven. Germany’s economic growth

remains solid and the demand for housing as a result of strong

migration to the country is boosting the residential market.

• According to a study of 805 educational institutions recently released

by Commonfund and the National Association of College and

University Business Officers (NACUBO), the average net investment

return for US and Canadian college and university endowments was

4.5% last year, the worst since 2009. However, endowments that

performed better tended to have the highest allocations to alternative

investments. The top decile allocated 62% to alternatives, versus an

average of 53% across all endowments.

• As the PE industry continues to grow and mature, digital technologies

are playing a more critical role than ever. Firms are rapidly seeking to

scale their capabilities across a range of competencies including

analytics, reporting, cyber and regulatory compliance. While the

industry currently remains overly reliant on manual processes for

front-office, middle-office and back-office functions, it is beginning to

recognize the need for change. EY and Private Equity International

recently released a survey of more than 100 PE CFOs, which found

that while sourcing and dealmaking remain center stage, developing

cost-effective operations through talent management, automation

and the ability to harness fund-level and portfolio company data is

increasingly essential.

Global PE acquisitions see most active January since GFC (in US$b)

PE acquisitions by month (in US$b)

$180

$160

$140

$120

$100

$80

$60

$40

$20

$0

$18.0

$16.0

$14.0

$12.0

$10.0

$8.0

$6.0

$4.0

$2.0

$0.0

Source: Dealogic

Source: Dealogic

Commitments

No. of funds

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Top deals in Jan 2017

Target Region Industry Sponsor Value (US$b)

McDonald's China

Management Ltd. Asia Pacific Dining & Lodging

Source: Dealogic

45

40

35

30

25

20

15

10

Carlyle Group LP

CITIC Capital Partners Ltd. $2.1

Hitachi Koki Co. Ltd. Asia Pacific Consumer Products KKR & Co LP $1.3

Catterton Management Co.

Leslie's Poolmart Inc. Americas Consumer Products LLC-L Catterton $1.8

Eagleford Shale Assets Americas Oil & Gas Blackstone Group LP $2.3

Cerba Healthcare

SASU EMEA Health care Partners Group Holding AG $1.9

LANDesk Software Inc. Americas Technology ClearLake Capital Group LP $1.2

Insights from EY/PEI PE CFO survey: What has been your technology focus

during the past two years, and what will it be over the next two years?

33%

42%

44%

41%

Management

reporting

40%

33%

33% 34%

27%

25%

Portfolio analytics Investor portal Fund accounting Regulatory

reporting

5

0

Past two year Next two years

Source: EY/PEI 2017 Global Private Equity Survey

5 Private Equity Capital Briefing


1.iii. Private equity: exits

Executive summary

• The pace of exits has been slowing as PE firms shift their focus to deployment. January 2017 saw a continuation of the trend,

with PE firms announcing 70 exits valued at US$26.0b, a decline of 11% from December.

• However, the month saw significantly improved sentiment in the IPO markets, with a number of PE-backed deals going public.

In total, six PE-backed deals raised US$3.9b. All were listings on US exchanges.

Current state

• The pace of exits has been slowing as PE firms shift their focus to

deployment. While 2014 was a record year for exits, and 2015 was

similarly robust, exit activity has decelerated in recent quarters. PE firms

exited 999 companies with an aggregate value of US$331b in 2016, down

22% by value versus the year prior.

• January 2017 saw a continuation of the trend, with PE firms announcing

70 exits valued at US$26.0b, a decline of 11% from December. Activity

slowed most significant in sales to strategics and secondary buyers.

Overall, M&A exits were down 20% versus December; this was largely the

result of declines in EMEA, which saw a particularly active month in

December. However, this represented an increase of 81% versus January

2016.

• Macro concerns and geopolitical uncertainty have weighed heavily on the

global IPO markets in recent months—between the macro slowdown in

China, Britain’s vote to leave the EU in June and the surprise results of the

US presidential election in November, markets have been largely unable to

find their footing. In 2016, global IPO activity declined 13% by volume and

31% by value, with 1,084 companies going public, raising US$134.2b,

making it the quietest year for IPOs since 2012.

• January saw significantly improved sentiment in the IPO markets, with a

number of PE-backed deals going public. In total, six PE-backed deals

raised US$3.9b. All were listings on US exchanges.

PE exits by region—comparison of LTM (last 12 months) and

PTM (prior 12 months)

Value

0%

-30% -25% -20% -15% -10% -5% 0%

Asia-Pacific

EMEA

Global

Americas

Number of deals

5%

Source: Dealogic -20%

-5%

-10%

-15%

PE M&A exits by year (US$b)

$45.0

$40.0

$35.0

$30.0

$25.0

$20.0

$15.0

$10.0

$5.0

$0.0

Source: Dealogic

Top PE exits, January 2016

Announce

ment or

filing date

6-Jan-17

9-Jan-17

2-Oct-15

1-Jun-16

24-Jan-17

Source: Dealogic

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Strategic

Company Sector Value

(US$b)

Sponsor

Invitation Homes

Inc.

Real

Estate/Property $6.3 Blackstone Group LP IPO

Surgical Care

Affiliates Inc. Health care $3.4 TPG Capital LP M&A

Sterling Partners Inc.;

Citigroup Private Equity;

Laureate Professional

KKR & Co. LP;

Education Inc. Services $2.9 Snow Phipps Group LLC IPO

JELD-WEN Holding Construction/

Inc.

Building $2.4 Onex Corp. IPO

Multi Packaging

Carlyle Group LP;

Solutions Forestry &

Madison Dearborn Partners

International Ltd. Paper $2.3 LLC

M&A

PE

Type

PE IPOs by month (in US$b)

Environment and horizon

• 2017 is positioned to be a strong year for IPOs. With many of the more

obvious geopolitical impediments now in the rearview, and many global

equities markets flirting with all-time highs, investor confidence is high. Q4

saw several high-profile deals price, and there remains evidence that this

momentum is poised to carry over into the New Year. The year could even

see the return of some PE manager listings to the market. In early

February, alternative investment manager and PE advisory Hamilton Lane

Advisors filed for a listing on the Nasdaq exchange in an IPO that could

raise up to US$200m.

• There are currently more than 60 PE-backed companies in IPO

registration; in the aggregate, they could raise nearly US$10b in total

proceeds. Key things to watch in 2017:

• Low volatility and a lack of macro impediments should set the

stage for an active first half.

• Investor confidence is returning to the emerging markets, and

could enable a marked uptick in issuance.

• Mounting pressure on unicorns could drive deals in the tech

space.

$8.0

$7.0

$6.0

$5.0

$4.0

$3.0

$2.0

$1.0

$0.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Source: Dealogic

6

Private Equity Capital Briefing


Volume

2. M&A

Executive summary

• There was a strong start to global M&A in 2017 by value, though volume declined marginally.

• The value for US-targeted deals during the month was US$110b − up 26% year-on-year (Y0Y).

• Big-ticket deals in consumer products and retail, oil and gas, and life sciences grabbed headlines.

• The M&A outlook for 2017 remains positive as companies look to optimize portfolios.

• Future-proofing will be a key driver of M&A as companies look for disruptive trends within their core and innovation outside their sectors.

Current state

• Megadeals led the charge in 2017, as the year started strongly for bigticket

deals, with a number of billion-dollar plus deals (44) capturing the

limelight and boosting M&A deal value. January saw deals worth

US$262b, the highest value recorded in the first month since 2008. Total

value was up 44% and 14% compared with similar periods in 2016 and

2015 respectively. Companies are using dealmaking as their primary

response to elevated pressure for growth and the threat of disruption,

even though heightened geopolitical and economic uncertainty further

complicates the outlook for many industries.

• US-based deals kicked off 2017 in a big way. Total value for US-targeted

deals was US$110b, a four-year high, indicating the increasing optimism

for US M&A activity. This trend may accelerate further due to anticipated

favorable policies under the Trump Administration, strong credit markets

and elevated confidence in the C-suite.

• Oil and gas was one of the most active sectors in January, with 68 deals

worth US$43.5b. With the stabilization of oil prices, there is a growing

demand for upstream assets, particularly in the Permian Basin, signaling a

recovering appetite for production expansion. The Permian Basin has

become the hot spot for M&A in the shale oil industry, due to its impressive

production profile and low-cost resources. There were several examples of

this trend: a US$6.6b asset acquisition by Exxon Mobil; the friendly

takeover of Clayton Williams by Noble Energy, worth US$3b; and Targa

Resources’ purchase of Outrigger Energy's assets.

• The largest deal of the month saw US health care giant Johnson &

Johnson (J&J) agree to buy Swiss biotech company Actelion, including

spinning off Actelion's research and development pipeline. The acquisition

gives J&J access to the Swiss group's lineup of high-price, high-margin

medicines for rare diseases, helping it diversify its portfolio as its biggest

product Remicade, which treats arthritis, faces cheaper competition.

• Another important deal was the merger between Italy's Luxottica and

France’s Essilor, to create a global powerhouse in the eyewear industry

with annual revenue of more than €15b. The deal, one of Europe's largest

cross-border tie-ups, brings together Luxottica, the world's top frame

maker, with brands such as Ray-Ban and Essilor, a leading manufacturer of

ophthalmic lenses. By merging, the companies will be better positioned to

take advantage of strong demand in a market expected to achieve

continued growth due to an aging global population and increasing

awareness about eye care in Asia and Latin America.

Environment and horizon

• Global M&A is expected to remain strong in 2017. Increasing investor

demands for higher returns means strategic growth remains at the heart of

companies’ corporate strategy as they look to focus on expansion to tap

into new areas of growth – and M&A is often the quickest route to achieve

this. Market conditions remain supportive of M&A, with an abundance of

capital available at historically low borrowing rates.

• Cross-border deals are likely to be in ready supply in 2017. In the next

year, we are expected to see heightened cross-border deals, to buy into

pockets of growth and secure supply chains. With companies increasingly

operating in a global environment with globalized supply chains, those

need to be secured, and M&A is increasingly becoming an effective

instrument to achieve that. In 2017, we should see increasing cross-border

dealmaking, particularly between Asia and North America, as well as a

continuing flow of outbound purchases from China into Europe and Asia.

• Regulatory policies may ease in 2017 compared with 2016, which saw a

record amount of deals being pulled due to regulatory and antitrust

concerns. In 2017, the regulation of dealmaking will be in the spotlight,

particularly in the US, where the new Trump Administration may lead to a

more favorable regulatory regime.

• Sector convergence is set to be a hot topic for the boardroom in the

foreseeable future. Digital disruption has led to the blurring of sector lines

and changing consumer behavior, thereby making it imperative for

companies to look at new business models. Companies will look to futureproof

their businesses through acquisitions outside their core sector to

survive and thrive in this increasingly disruptive environment.

• Consequently, portfolio reorganization will be a key deal driver, making

companies active both on the buy side and sell side. We can expect to see

companies having another look at their portfolio to capitalize better on the

disruptive trends impacting their business. Conducting strategic reviews

will be the new norm to ensure resilient capital allocation, with a view to

selling non-core assets and releasing capital to support their strategic

7 priorities.

Top 10 announced deals by value, January 2017

Source: Dealogic.

Target Sector Country Acquiror Value

(US$m)

Actelion Ltd. Life sciences Switzerland Johnson & Johnson 31,373

Luxottica Group SpA

Williams Partners LP

(31.6527%)

Zodiac Aerospace SA

Deal environment: by area (YOY % change)

Last 12 months (LTM) to January 2017 versus LTM to January 2016

Source: Dealogic and EY analysis.

Value

0%

-20% EMEA 0%

5%

-5%

-10%

-15%

-20%

Deal environment: by target sector and target area (% share of

global value)

LTM to January 2017

Source: Dealogic and EY analysis; excludes real estate asset transactions.

Note: because of rounding, percentages may not add up to total.

M&A analysis as at 1 February 2017.

Consumer Italy Essilor International SA 25,546

products and retail

Oil and gas US Williams Companies Inc 11,400

Aerospace and

defense

Note: data is continually updated and therefore subject to change.

Figures have been rounded off to nearest decimal place.

France Safran SA 10,333

VCA Inc. Provider care US Mars Inc. 9,082

Permian Basin – oil and Oil and gas US Exxon Mobil Corp. 6,600

gas assets

WGL Holdings Inc. Power and utilities US AltaGas Ltd. 6,295

Ariad Pharmaceuticals

Inc.

Life sciences US Takeda Pharmaceutical

Co Ltd.

5,664

Bioverativ Inc. Life sciences US Existing Shareholders 5,167

Booker Group plc.

Consumer UK Tesco plc. 4,687

products and retail

Global

Americas

Asia-Pacific

Americas Asia-Pacific EMEA Total

Technology 8% 3% 4% 16%

Oil and gas 9% 1% 2% 13%

Diversified industrial products 5% 2% 5% 12%

Consumer products and retail 5% 2% 3% 10%

Life sciences 5% 1% 2% 8%

Power and utilities 3% 1% 2% 7%

Media and entertainment 4% 1% 1% 6%

Banking and capital markets 1% 1% 2% 5%

Automotive and transportation 1% 3% 1% 5%

Others 9% 6% 5% 19%

All sectors 51% 22% 27% 100%

Capital Briefing


2.i. M&A: cross-border deal flow

Key cross-border M&A deal flow

(LTM to January 2017)

(Total = US$1.35t)

N America to:

W Europe – $173b

UK&I – $72b

Latin America – $21b

UK&I to:

N America – $90b

W Europe – $12b

Middle East – $3b

Africa – $3b

W Europe to:

N America – $131b

UK&I – $23b

L America - $13b

Greater China and

Mongolia to:

W Europe – $84b

N America – $59b

L America – $17b

Japan to:

N America – $40b

UK&I - $35b

W Europe – $12b

L America to:

W Europe – $8b

N America – $3b

Key

>$100b

>$50b

>$10b

Note: all figures are in US$.

Cross-border M&A deal flow (LTM to January 2017)

(US$m)

Target Acquiror 1 Africa SE Asia

(including

Korea)

Greater

China and

Mongolia $

Russia,

CIS and

CSE

W Europe India Japan Latin

(excluding

America

UK&I)

Middle

East

North

America

Oceania UK&I Inbound

total

Africa 962 81 4,702 1,621 2,695 32 1,563 - 447 5,912 867 2,879 21,763 127%

SE Asia (including

Korea)

%

versus

PTM

1 7,188 7,692 13 2,662 36 3,018 24 1,174 5,118 261 1,192 28,381 -20%

Greater China and

2 5,115 24,858 - 3,643 - 553 - - 11,106 212 101 45,590 -11%

Mongolia 2

Russia, CIS and CSE 1,038 1,406 3,146 2,955 3,704 4,148 8,630 1,048 11,856 1,281 1,914 1,269 42,397 19%

W Europe (excluding

UK&I)

47 2,717 84,497 6,460 90,640 1,331 11,916 7,962 1,981 172,834 1,084 12,495 393,964 43%

India 632 7,651 1,589 12,922 1,515 - 2,105 - 500 4,385 83 86 31,469 82%

Japan - 217 8,759 - 236 444 - - - 475 15 - 10,146 -58%

Latin America 40 28 16,914 700 13,360 20 69 5,724 1,194 20,667 1,683 319 60,717 28%

Middle East 43 44 14,381 436 7,509 6 4 - 3,843 2,463 125 2,887 31,741 195%

North America 6,937 15,062 59,441 177 131,378 1,930 40,478 3,269 6,221 128,285 5,522 89,684 488,383 11%

Oceania 675 1,976 14,436 1 2,702 50 1,559 - - 14,556 1,827 1,465 39,249 -13%

UK&I 3,486 767 12,708 70 22,711 1,030 35,040 - 2,646 72,053 474 1,241 152,227 -55%

Outbound total 13,865 42,252 253,125 25,356 282,755 9,028 104,934 18,027 29,864 439,134 14,067 113,620 1,346,027 1%

% versus previous

12 months (PTM)

-8% 91% 91% 253% -42% 85% 35% 22% -58% 20% 11% -6% 1%

1. Acquiror refers to acquiror’s ultimate holding company.

2. Greater China and Mongolia includes mainland China, Hong Kong, Macau, Mongolia and Taiwan.

M&A analysis as at 1 February 2017.

Source: Dealogic. All Rights Reserved.

Note: data is continually updated and therefore subject to change.

Key >US$100b >US$50b >US$10b

Intra-area cross-border deals

8 Capital Briefing


Volume

3. IPOs

Executive summary

• Global IPO activity surged in January 2017, witnessing a significant YOY increase in terms of both deal volume and value.

• The Asia-Pacific region continued to dominate global IPO activity in terms of both deal volume and value.

• US exchanges accounted for 6 of the top 10 deals this month.

• IPO activity in Europe is expected to increase in the next few months, as the IPO pipeline looks healthy and investors are seeking investment

opportunities. However, implications from Brexit, new US policies and elections in France, Germany and the Netherlands later in 2017 may

affect the IPO markets across the region.

Current state

• Global IPO activity got off to a lively start, with 103 deals raising

US$10.1b in January 2017 on the back of strong activity in Asia-Pacific

and the US. This level of activity was significantly up on the slow start to last

year (up 243% by volume and 1118% by value YOY) and compared positively

with the average for January over the past five years (74% and 44% higher).

This month witnessed the highest level of IPO activity in January since

2014.

• Asia-Pacific continued to dominate the global IPO activity, raising

US$5.4b via 88 deals in January 2017, accounting for 85% and 54% of the

global volume and value respectively. Compared with January 2016, the

region registered a 300% and 679% increase in terms of deal volume and

value respectively. The activity largely made up of listings from Greater

China, which contributed 66% and 49% to the global deal volume and value

respectively.

• EMEIA saw sluggish IPO activity, as investors continue to be selective as a

result of the current economic and political outlook. While January is

traditionally a slow month, the region saw only four deals raising

US$128.8m in January 2017, which was down 43% in terms of deal volume

and up 297% in terms of deal value as compared with January 2016.

• US exchanges made a bright start to 2017 with nine deals raising US$4.3b

against no activity in January 2016, accounting for 43% of total global

value. Financial-sponsored IPOs also made a comeback, accounting for eight

of the nine deals this month. US exchanges accounted for five of the top six

deals globally by proceeds this month, along with the only US$1b-plus deal –

the listing of real estate investment trust Invitation Homes Inc., which raised

US$1.5b. This was the largest US IPO since October 2015.

Environment and horizon

• The prospects for global IPO activity look more positive in 2017 compared

with 2016 as many threats to the stability of the global economy ease and

investors regain confidence. However, uncertainty is likely to persist in

certain regions over the coming months, so we do not expect a significant

improvement until at least the second half of the year.

• Asia-Pacific is expected to drive global IPO activity in 2017, much like

2016. IPO activity in mainland China is expected to accelerate in 2017 due

to the faster pace of IPO approvals by the China Securities Regulatory

Commission since November 2016. This should enable more companies that

are currently in the long queue of the pipeline to gain access to the capital

markets, as long as the market environment is supportive. Despite a solid

pipeline, Hong Kong's IPO fund-raising capability, especially for mega IPOs,

may come under pressure due to the relatively lower post-IPO performance

of some high-profile listings in 2016. This may result in a slower start to

Hong Kong's IPO market in the first half of the year.

• US IPO activity is expected to improve as we progress through 2017 on

the back of a pipeline of more than 130 companies ready to list, as well as

those that have filed their IPO registrations confidentially. However, US

President Donald Trump’s Executive Order on minimizing the economic

burden of the Patient Protection and Affordable Care Act (Obamacare) may

affect a number of health care and life science companies considering an

IPO, as investors may face greater uncertainty in valuing such companies in

a rapidly changing regulatory environment.

• The European IPO outlook is optimistic, as the IPO pipeline looks healthy

and investors are seeking investment opportunities with compelling and

well-supported equity stories. The pipeline of cross-border IPO activity is

also beginning to build, with a number of international companies looking at

listing in London. However, as we move into 2017, implications from Brexit,

new US policies and elections in France, Germany and the Netherlands may

potentially affect equity stories and investor sentiment, and hence the IPO

markets across Europe.

• IPO activity in the ASEAN (Association of Southeast Asian Nations) region

should rise in 2017, as receding uncertainty, commodity price gains and

faster economic growth is expected to attract investors in Singapore and

Malaysia. However, elsewhere in Southeast Asia, significant fluctuation in

the rupiah over the past year is expected to dampen the appetite for listings

in Indonesia, while the political situation and a drop in the peso may affect

investor sentiment for the Philippines. Higher benchmark interest rates

under a new Government in the US could also tempt international investors

to pull money out of riskier emerging markets.

Top 10 IPOs by proceeds, January 2017

Source: Dealogic.

Issuer name

Issuer

location

Sector Exchange Proceeds

(US$m)

Invitation Homes Inc. US Real estate New York 1,540

JELD-WEN Holding Inc.

China Galaxy Securities Co.

Ltd.

US

China

Diversified industrial

New York 661

products

Banking and capital

Shanghai 591

markets

Keane Group Inc. US Oil and gas New York 585

Laureate Education Inc.

US

Government and

public Sector

NASDAQ 490

Jagged Peak Energy Inc. US Oil and gas New York 474

Jilin Jiutai Rural

Commercial Bank Corp. Ltd. China

Central China Securities Co.

China

Ltd.

REV Group Inc.

SMU SA

US

Chile

Banking and capital

markets

Banking and capital

markets

Automotive and

transportation

Consumer products

and retail

IPO activity by area (YOY % change)

(LTM to January 2017 versus LTM to January 2016)

Source: Dealogic; regional classification on the basis of issuer nationality.

Value

Hong Kong 446

Shanghai 406

New York 275

Santiago 198

0%

-60% -50% -40% -30% -20% -10% 0%

EMEA

Americas

Global

IPO activity by sector and area (% share of global proceeds)

LTM to January 2017

Source: Dealogic; regional classification on the basis of issuer nationality.

Note: because of rounding, percentages may not add up to total.

Asia-Pacific 20%

-20%

-40%

Americas Asia-Pacific EMEA Total

Banking and capital markets 1% 17% 2% 20%

Real estate 3% 8% 2% 13%

Technology 1% 5% 3% 10%

Life sciences 2% 5% 2% 9%

Consumer products and retail 2% 5% 2% 9%

Automotive and transportation 1% 7% 1% 8%

Diversified industrial products 1% 5% 2% 8%

Oil and gas 3% 1% 3% 6%

Power and utilities 0% 1% 4% 5%

Others 2% 6% 4% 12%

Total 16% 59% 25% 100%

9

Capital Briefing


4. Loans

Executive summary

• Europe recorded the second-highest monthly tally in nearly two years, and the biggest for an opening month in any year since 2007.

• Repricing activity continued the surge in January; there has almost been three times as much repricing activity from September to January

as M&A-driven activity.

• China’s property developers are tapping the offshore loan markets to help refinance billions of dollars of maturing debt this year.

• The tightening of yield continued in January from last year, helping borrowers to shave off considerably more from their cost of financing.

• Issuance of second lien debt and potentially subordinated mezzanine debt is expected to increase in 2017.

Current state

• In January, US$95b of loans were issued in the US and €9.4b in Europe,

taking the YTD global issuance to US$105b, up 133% from same period in

2016. Europe recorded the second-highest monthly tally in nearly two

years, and the biggest for an opening month in any year since 2007.

• The recent pickup in this activity is an extension of a bustling fourth

quarter, bolstered by the sustained issuer-friendly market. M&A

contributed about a quarter of January’s deals by both volume and count,

but were overshadowed by the avalanche of repricings.

• Repricing activity continued the surge in January although it did not

reach as high a level as seen during September and October. There has

almost been three times as much repricing activity from September to

January as M&A-driven activity.

• The Middle East’s loan market has had the quietest January in 21 years

with little sign of picking up. Due to the execution of all the imminent

refinancings in the recent past, only a few new money deals are expected

as low oil prices do not trigger appetite for money.

• Globally, China’s property developers are tapping the offshore loan

markets to help refinance billions of dollars of maturing debt this year.

These financings are in contrast with the start of 2016, when property

developers were rushing into the domestic Chinese market to lock in lower

funding costs.

• Issuer-friendly conditions in the US loan market have prompted a rush of

opportunistic transactions to start the new year. Even as borrowers

crowded the market in anticipation of better terms, the results in January

were often better than they might have expected.

• The tightening of yield continued in January from last year, helping

borrowers to shave off considerably more from their cost of financing in

January; the average clearing yield for single-B rated term loans dipped in

the US to 5.18% from 5.34% in December, and tightened to 4.28% from

4.50% in Europe, explaining the repricing wave of the past five months.

Environment and horizon

• Since May of 2016, a repricing wave in the European market has led to

documentation terms growing steadily weaker. Lack of information is

making investors concerned, as it makes investment decisions more

challenging and could exacerbate any downward turn in a business with no

covenants to protect them.

• However, 2017 has got off to a busy start; refinancing and repricing

deals are driving issuance, supported by a “bond to loan” trend as private

equity firms take advantage of favourable covenant lite loan structures.

Add-on acquisitions, secondary buyouts and bond to loan deals are also

supporting supply as sponsors refinance high-yield bonds and junior loans

with lower coupon, covenant lite senior loans.

Opportunities

• Issuance of second lien debt and, potentially, subordinated mezzanine

debt is expected to increase in 2017 in Europe as borrowers look to

refinance and recapitalize existing deal structures. Players are expecting

the loan space, with its ample liquidity, to continue to be the market of

choice for borrowers in early 2017.

• The trend of US borrowers looking to the European market for loan

financing is not expected to end soon, especially with the anticipated rise

in US rates.

Global loan issuance by industry, YTD 2017

Source: Thomson ONE.

Government and agencies

Industrials

Materials

Retail

Health care

Media and entertainment

High technology

Consumer products and services

Real estate

Energy and power

Telecommunications

Financials

Consumer staples

10

0 100 200 300 400

Proceeds (US$b)

Global investment-grade loans (US$b)

Source: Thomson ONE.

800

600

600

400

400

200

200

0

0

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17*

Proceeds (LHS)

Number of issues (RHS)

*QTD data till 31 January 2017

Global high-yield loans (US$b)

Source: Thomson ONE.

1,200

900

600

300

0

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17*

Proceeds (LHS)

Number of issues (RHS)

*QTD data till 31 January 2017

Top arrangers ranking, YTD 2017 (US$b)

Source: Thomson ONE.

Proceeds Issues

Bank of America Merrill Lynch 96.4 32

Sumitomo Mitsui Finl Grp Inc 46.0 14

Mizuho Financial Group 43.1 12

Deutsche Bank 34.4 11

Barclays 30.8 9

All loans by region, YTD 2017 (US$b)

3,000

2,000

1,000

0

Source: Thomson ONE

Market share Proceeds Issues

Americas 47.5% 392.5 72

EMEA 44.1% 365.1 17

Asia-Pacific 8.4% 69.5 46

Capital Briefing


5. Bonds

Executive summary

• Global high-yield activity rose sharply in January; both the US and Europe experienced tremendous volume increments.

• The start of this year has proven to be far more varied, most evident in the amount of sterling issuance.

• Technical factors are pushing issuers back to the loan market, which is why the use of all-senior financing has increased.

• Sterling issuances increased in January as the Brexit debate intensified, as borrowers typically avoid times of potential volatility.

Current state

• Global high-yield activity rose sharply in January on a monthly basis.

High-yield issuance in the US was US$17.5b and €5.9b in Europe, taking

the YTD total global issuance to US$23.4b, up 261% from the same period

last year.

• The European high-yield market had a strong start this year, measured

by volume, diversity and deals flying through syndication. January 2017

was far ahead of this time last year and, at one stage, even looked like it

might have been the strongest start to a year in the market’s history.

Compared with the typical slow-start opening, this year has proven to be

far more varied, however, and this is most evident in the amount of

sterling issuance, which almost touched the full-year total in 2016.

• US high-grade issuance shattered both records and expectations in

January; refinancing-driven borrowers swarmed the market to lock in

rates, banks built capital and borrowers maintained strong pricing leverage

through cascading supply.

• The high-yield new issue market was dominated by sterling debut issuers

such as Talk Talk, Amigo Loans, NewDay and B&M Retail, as well as dual

currency double-B rated such as Telecom Italia, Jaguar Land Rover and

Smurfit Kappa. NewDay was the only Leveraged Buyout related deal.

• This year’s early hurdles have been more political than economic and,

other than the foreign exchange space, markets have largely taken

Theresa May’s “hard Brexit” speech and Donald Trump’s inauguration in

their stride compared with concerns over Chinese growth last year.

• High-yield issuance for M&A activity in January was US$5.3b,

contributing 43% to the total in the US. In Europe, there was €494m of

high-yield issuance, or a 9% contribution. Although these numbers are

marginally higher than the same period last year, M&A contributions have

decreased overall from the last few months due to the surge in repricings.

• Clearing yields for single-B rated bonds widened in the US to 5.34% in the

three months to the end of January, from 5.18% at the end of December,

and yields tightened to 3.62% from 4.11% in Europe.

Environment and horizon

• Market sentiment felt as if there was a lot of pent-up demand in high

yield. People weren’t fully invested, there wasn’t the volatility they had

expected, and then they had large inflows and coupon build-up that led to a

strong start to the year.

• Technical factors are pushing issuers back to the loan market, which is

why the use of all-senior financing has increased, thereby resulting in

lower overall leverage multiples, while leverage through senior debt rose to

2007 levels.

Opportunities

• Sterling issuances increased in January as the Brexit debate intensified,

as borrowers typically avoid times of potential volatility. However, the

market is sensing uncertainty ahead and playing high on issuing sterling.

• Issuers are going to take advantage of Brexit new-issue premium;

sterling deals tend to offer more yield than euros anyway and, in a year

when borrowers are confident that low yielding double-Bs will be beneficial,

the chance to buy paper with some yield is always going to be attractive.

• The European Central Bank might start to signal the gradual tapering of

its bond purchase program in few months, a policy move that is keenly

anticipated by investors.

Global bond issuance by industry, YTD 2017

Source: Thomson ONE.

11

Health care

Retail

Consumer products and services

Media and entertainment

Real estate

Consumer staples

Materials

Telecommunications

Energy and power

Industrials

High technology

0 10 20 30 40

Proceeds (US$b)

Euro bond issuances

Source: Thomson ONE.

250

200

150

100

50

0

Feb

16

Top 10 corporate bond issuers, YTD 2017 (US$b)

Source: Thomson ONE.

Issuer Nation Industry Proceeds

Microsoft Corp US High technology 17.0

Broadcom Corp US High technology 13.6

AT&T Inc US Telecommunications 10.0

Deutsche Telekom

International

Netherlands Telecommunications 7.3

Petrobras Global Finance

BV

Netherlands Energy and power 4.0

Park Aerospace Holdings

Ltd

Republic of

Ireland

Industrials 3.0

IBM Corp US High technology 2.8

Comcast Corp

Mar

16

Apr

16

US bond issuances

Source: Thomson ONE.

400

300

200

100

0

Feb

16

Mar

16

May

16

Jun

16

Proceeds (US$b) (LHS)

Apr

16

May

16

Jun

16

Proceeds (US$b) (LHS)

US

Jul

16

Jul

16

Media and

entertainment

Telefonica Emisiones S.A.U Spain Telecommunications 2.0

Nissan Motor Co Ltd Japan Industrials 2.0

Aug

16

Aug

16

Sep

16

Oct

16

Nov

16

Dec

16

Number of issues (RHS)

Sep

16

Oct

16

Nov

16

Dec

16

Number of issues (RHS)

Jan

17

Jan

17

250

200

150

100

50

0

500

400

300

200

100

0

2.5

Capital Briefing


Appendices


Appendix A

Global PE fundraising activity

Global PE fundraising

Commitments (US$b)

Number of funds

$700

1,200

$600

1,000

$500

800

$400

600

$300

$200

400

$100

200

$0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ytd

0

Source: Preqin

Dry powder — buyout funds — by region

North America Europe Asia and rest of world Asia-Pacific and ROW as percentage of total

$600

16%

$500

14%

12%

$400

10%

$300

8%

$200

6%

4%

$100

2%

$0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan

2017

0%

Source: Preqin

13

Private Equity Capital Briefing


Appendix A

Global PE acquisition activity

PE acquisitions by year (in US$b)

Value

Number of deals

$800

4,000

$700

3,500

$600

3,000

$500

2,500

$400

2,000

$300

1,500

$200

1,000

$100

500

$0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

ytd

0

Source: Dealogic

Global PE value and volume — quarterly trend (US$b)

Value

Number of deals

$140

700

$120

600

$100

500

$80

400

$60

300

$40

200

$20

100

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

0

Source: Dealogic

14

Private Equity Capital Briefing


Appendix A

Global PE acquisition activity by region — Americas

Americas PE acquisitions (in US$b)

Value

Number of deals

$80

350

$70

$60

$50

$40

$30

$20

$10

300

250

200

150

100

50

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

0

Source: Dealogic

Americas PE acquisitions — the top deals with disclosed financial terms in 2016

Announcement

date

12-Jan-17

Completion

date

Company Sector Value (US$) Acquiror

Oil & Gas Assets (Eagleford Shale

Assets) Oil & Gas 2.3b Blackstone Group LP

17-Jan-17 Leslie's Poolmart Inc. Consumer Products 1.8b Catterton Management Co. LLC

3-Jan-17 23-Jan-17 LANDesk Software Inc.

19-Jan-17

27-Jan-17

24-Jan-17

Computers &

Electronics 1.2b ClearLake Capital Group LP

Power Station (four natural gas

and one hydro plant) Utility & Energy 925m LS Power Equity Advisors LLC

Computers &

Harris Corp (IT services business) Electronics 690m Veritas Capital Management LLC

Bob Evans Farms Inc. (Bob Evans

Restaurants) Dining & Lodging 605m Golden Gate Capital Corp

9-Jan-17 9-Jan-17 Anvil International Consumer Products 315m One Equity Partners LLC

Source: Dealogic

15

Private Equity Capital Briefing


Appendix A

Global PE acquisition activity by region — EMEA

EMEA PE acquisitions (in US$b)

Value

Number of deals

$50

$45

$40

$35

$30

$25

$20

$15

$10

$5

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

300

250

200

150

100

50

0

Source: Dealogic

EMEA PE acquisitions — the top deals with disclosed financial terms in 2016

Announcement date Completion date Company Sector Value (US$) Acquiror

22-Jan-17 Cerba Healthcare SASU Health care 1.9b Partners Group Holding AG

30-Jan-17 Zenith Vehicle Contracts Ltd. Finance 940m Bridgepoint Advisers Ltd.

13-Jan-17

ConCardis GmbH

Computers &

Electronics 744m

Advent International Corp.;

Bain Capital LLC

Power Station (365 MW

operational solar PV power

6-Jan-17

portfolio) Utility & Energy 581m EFG Hermes Private Equity

3-Feb-17 Resilux NV Chemicals 455m Bain Capital LLC

2-Feb-17 Golden Goose Srl Textile 432m Carlyle Group LP

Consumer

3-Feb-17

Audiotonix Ltd.

Products 254m Astorg Partners SA

30-Jan-17 30-Jan-17 Davies Group Ltd. (Majority %) Insurance 113m HGGC LLC

Source: Dealogic

16

Private Equity Capital Briefing


Appendix A

Global PE acquisition activity by region — Asia-Pacific

Asia-Pacific PE acquisitions (in US$b)

Value

No. of deals

$30

140

$25

120

$20

$15

$10

100

80

60

40

$5

20

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

0

Source: Dealogic

Asia-Pac PE acquisitions — the top deals with disclosed financial terms in 2016

Announcement

date

8-Jan-17

Completion

date

Company

Sector

Value

(US$b)

McDonald's China

Management Ltd. Dining & Lodging 2.1b

Acquiror

Carlyle Group LP;

CITIC Capital Partners Ltd.

13-Jan-17 Hitachi Koki Co Ltd. Consumer Products 1.3b KKR & Co LP

Affinity Equity Partners

(HK) Ltd.;

1-Feb-17 Hyundai Card Co Ltd. (43%) Finance 584m Carlyle Group LP

31-Jan-17 31-Jan-17 Allied Mills Pty Ltd. Food & Beverage 344m

Pacific Equity Partners Pty

Ltd.

4-Jan-17 4-Jan-17

MEDALL Healthcare Pvt

Ltd. (80%) Health care 235m Abraaj Capital Ltd.

3-Feb-17

3-Feb-17

Shanghai Siyanli Industry

Co. Ltd. (Majority %) Health care 224m

Standard Chartered

Private Equity Ltd.

18-Jan-17 18-Jan-17 PVR Ltd. (14%) Leisure & Recreation 121m Warburg Pincus LLC

Source: Dealogic

17 Private Equity Capital Briefing


Appendix A

Global PE exit activity

Global PE-backed exits by M&A — value and volume — quarterly trend (US$b)

Value

Number of deals

$140

350

$120

300

$100

250

$80

200

$60

150

$40

100

$20

50

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

0

Source: Dealogic

Global PE-backed IPOs — value and volume — quarterly trend (US$b)

Value

Number of deals

$45

90

$40

80

$35

70

$30

60

$25

50

$20

40

$15

30

$10

20

$5

10

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

0

Source: Dealogic

18 Private Equity Capital Briefing


Appendix A

Global PE exit activity — Americas

Americas PE exits (in US$b)

M&A value IPO value M&A volume IPO volume

$90

$80

$70

$60

$50

$40

$30

$20

$10

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

160

140

120

100

80

60

40

20

0

Source: Dealogic

Americas PE exits — top exits 2016

Announcement

or filing date

Completion

or priced

date

Company Sector Value (US$b) Sponsor Type

6-Jan-17 31-Jan-17 Invitation Homes Inc. Real Estate/Property $6.3 Blackstone Group LP IPO

9-Jan-17

Surgical Care Affiliates

Inc. Health care $3.4 TPG Capital LP M&A

Sterling Partners Inc.;

Citigroup Private Equity;

KKR & Co. LP;

2-Oct-15 31-Jan-17 Laureate Education Inc. Professional Services $2.9 Snow Phipps Group LLC

IPO

1-Jun-16 26-Jan-17 JELD-WEN Holding Inc. Construction/Building $2.4 Onex Corp. IPO

24-Jan-17

Multi Packaging Solutions

International Ltd. Forestry & Paper $2.3

Carlyle Group LP;

Madison Dearborn Partners LLC

M&A

14-Dec-16 19-Jan-17 Keane Group Inc. Oil & Gas $2.0 Cerberus Capital Management LP IPO

Leonard Green & Partners LP;

17-Jan-17 Leslie's Poolmart Inc. Consumer Products $1.8 CVC Capital Partners Ltd.

M&A

26-Jan-17

MoneyGram International

Inc. Finance $1.5

Thomas H Lee Partners LP;

Goldman Sachs Capital Partners

M&A

24-Oct-16 26-Jan-17 REV Group Inc. Auto/Truck $1.4 AIP LLC IPO

Computers &

25-Jan-17

CoverMyMeds LLC Electronics $1.4 Francisco Partners Management LP M&A

Source: Dealogic

19

Private Equity Capital Briefing


Appendix A

Global PE exit activity — EMEA

EMEA PE exits (in US$b)

M&A value IPO value M&A volume IPO volume

$70

$60

$50

$40

$30

$20

$10

$0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

160

140

120

100

80

60

40

20

0

Source: Dealogic

EMEA PE exits — top exits 2016

Announcement

or filing date

Completion or

priced date

Company Sector Value (US$) Sponsor Type

7-Feb-17 Mauser Group NV Chemicals $2.3b Clayton Dubilier & Rice LLC M&A

22-Jan-17

30-Jan-17

Cerba Healthcare

SASU Health care $1.9b PAI Partners SAS M&A

Zenith Vehicle

Contracts Ltd. Finance $940m HgCapital LLP M&A

23-Jan-17

7-Feb-17

Nordic Cinema Group

AB

Momondo Group Ltd.

Leisure &

Recreation $931m Bridgepoint Advisers Ltd M&A

Computers &

Electronics $550m Great Hill Partners LP M&A

2-Feb-17 Golden Goose Srl Textile $431m Ergon Capital Partners SA M&A

5-Jan-17 5-Jan-17 Micheldever Group Ltd. Auto/Truck $265m

Graphite Capital Management

LLP

M&A

3-Feb-17 Audiotonix Ltd. Consumer Products $253m Epiris Managers LLP M&A

1-Feb-17

7-Jan-17

Shopping Centres (4

shopping centres)

Real

Estate/Property $179m Blackstone Group LP M&A

Generis Farmacêutica

SA Health care $142m

Magnum Capital Industrial

Partners

M&A

Source: Dealogic

20

Private Equity Capital Briefing


Appendix A

Global PE exit activity — Asia-Pacific

Asia-Pacific PE exits (in US$b)

M&A value IPO value M&A volume IPO volume

$45.0

$40.0

$35.0

$30.0

$25.0

$20.0

$15.0

$10.0

$5.0

$0.0

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17

45

40

35

30

25

20

15

10

5

0

Source: Dealogic

Asia-Pacific PE exits — top exits 2016

Announcement or

filing date

5-Jan-17

Completion or

priced date

Company Sector Value (US$) Sponsor Type

China Modern Dairy

Holdings Ltd. (74.9%) Agribusiness $1.9b

CDH China Holdings

Management Co. Ltd.;

KKR & Co. LP

M&A

6-Feb-17 6-Feb-17 YongLe Tape Co. Ltd. Chemicals $245m Shaw Kwei & Partners Ltd. M&A

4-Jan-17

8-Feb-17

4-Jan-17

18-Jan-17 18-Jan-17 PVR Ltd. (14%)

MEDALL Healthcare Pvt

Ltd. (80%) Health care $235m Peepul Capital LLC M&A

Abacus Property Group

(World Trade Centre

complex in Melbourne); Real

KKR & Co. LP

Estate/Property $204m KKR & Co LP M&A

Leisure &

Recreation $121m

Multiples Alternate Asset

Management Pvt Ltd.

M&A

Source: Dealogic

21

Private Equity Capital Briefing Capital Briefing


Appendix B

M&A activity monthly flash

Volume Value Volume Value

Calendar

YTD

YTD % ∆

Calendar

YTD

YTD % ∆ LTM LTM % ∆ LTM LTM % ∆

2016 2017

2015 2016 2017

J F M A M J J A S O N D J F M A M J J A S O N D

J F M A M J J A S O N D J F M A M J J A S O N D J

2017

(to January

17)

vs. 2016

(to January

16)

2017

(to January

17)

vs. 2016

(to January

16)

LTM

(to January

17)

vs. PTM

(to January

16)

LTM

(to January

17)

vs. PTM

(to January

16)

M&A activity by areas and regions

Global 2,410 -25% 262,303 44% 35,113 -8% 3,570,462 -14%

Americas 942 -24% 156,190 45% 12,930 -12% 2,113,137 -14%

Canada 124 -38% 9,762 -53% 2,515 2% 223,272 9%

MeCAR 13 0% 753 83% 218 -17% 21,700 -6%

SA region 67 -13% 6,813 22% 826 -25% 85,002 30%

US 804 -21% 146,919 54% 10,332 -14% 1,933,996 -15%

EMEA 918 -27% 103,211 235% 12,745 -5% 1,256,119 -2%

Africa 35 -41% 1,875 -12% 570 -12% 46,903 55%

BeNe 60 -29% 1,882 407% 836 -11% 95,547 -69%

CIS 38 -45% 590 -59% 878 -10% 66,128 47%

CSE 34 -69% 1,929 -38% 896 -19% 51,837 21%

FraLux 177 -38% 42,444 1607% 2,312 -1% 172,651 -5%

GSA 203 3% 34,399 476% 2,193 -7% 351,410 121%

Israel 24 -14% 344 -74% 235 -10% 22,807 -59%

Mediterranean 113 6% 29,155 696% 1,352 -12% 144,855 -19%

MENA 19 -39% 2,749 480% 291 -16% 62,950 67%

Nordics 132 -3% 3,350 1% 1,378 3% 71,739 12%

UK&I 234 -29% 14,333 66% 3,604 4% 332,457 -36%

Asia-Pacific 862 -20% 63,335 -13% 13,460 -5% 1,113,718 -4%

ASEAN 135 -1% 3,551 -9% 1,842 6% 85,740 47%

Greater China 378 -19% 43,623 -14% 5,488 -4% 667,631 -8%

India 115 6% 2,091 26% 1,139 -16% 69,644 32%

Japan 201 -9% 9,264 -3% 3,032 -4% 180,426 4%

Korea 17 -85% 881 -89% 1,137 -14% 56,307 -45%

Oceania 60 -38% 4,680 148% 1,644 -4% 110,355 15%

M&A activity by sectors

Aerospace and defense 22 -24% 11,417 2184% 346 -13% 41,644 23%

Automotive and transportation 174 -19% 7,865 -82% 2,399 -8% 220,372 -29%

Banking and capital markets 142 -32% 11,171 -51% 2,212 -15% 279,718 -33%

Consumer products and retail 368 -26% 60,039 184% 5,198 -10% 440,233 -34%

Diversified industrial products 304 -23% 42,090 108% 4,723 -7% 562,810 34%

Government and public sector 43 -25% 603 -80% 592 -19% 17,597 -49%

Insurance 68 -24% 4,597 -7% 999 -13% 138,628 -55%

Life sciences 187 -21% 54,284 256% 2,346 -8% 420,491 -5%

Media and entertainment 146 -35% 4,668 -67% 2,301 -12% 239,310 -22%

Mining and metals 107 -24% 7,527 24% 2,099 1% 119,315 -14%

Oil and gas 96 -14% 44,963 421% 1,402 -1% 459,794 48%

Other sectors 322 -16% 9,103 -64% 3,895 -13% 119,212 -16%

Power and utilities 116 -9% 16,938 84% 1,408 -5% 260,753 42%

Provider care 85 -13% 15,151 324% 1,095 -8% 74,915 23%

Real estate 214 -26% 10,400 -12% 3,305 -5% 245,930 12%

Technology 665 -26% 28,882 -25% 9,228 -7% 624,950 -19%

Telecommunications 45 -22% 1,484 -65% 697 -18% 270,150 51%

Wealth and asset management 48 -45% 2,824 24% 967 -6% 52,173 -23%

Regions’ M&A numbers represent a summation of domestic, inbound and outbound M&A activity involving the region.

Sectors’ numbers represent involvement from either side, i.e., target or acquiror, except in the case of wealth and asset management, where only target-side involvement has been mapped.

M&A analysis as at 1 February 2017. Source: Dealogic. All Rights Reserved.

Note: data is continually updated and therefore subject to change.

22

Capital Briefing


Appendix C

M&A multiples and bid premium

Median deal multiple — EV / EBITDA

LTM

(to Jan 17)

Global Americas Asia-Pacific EMEA

PTM

(to Jan 16)

LTM

(to Jan 17)

Aerospace and defense 11.7x 12.5x 10.1x

Automotive and transportation 9.7x 10.0x 8.7x

Consumer products and retail 10.8x 11.0x 11.1x

Diversified industrial products 9.8x 10.1x 9.9x

Financial services 10.4x 10.4x 12.2x

Government and public sector 8.6x 15.6x 7.8x

Health care 10.9x 11.8x 11.9x

Life sciences 13.3x 10.9x 8.7x

Media and entertainment 12.2x 12.4x 11.3x

Mining and metals 10.2x 11.7x 8.8x

Oil and gas 9.2x 8.4x 8.3x

Other sectors 8.5x 7.9x 10.1x

Power and utilities 9.2x 9.5x 11.3x

Real estate 9.7x 9.3x 11.1x

Technology 11.3x 11.2x 12.2x

Telecommunications 8.3x 7.4x 9.9x

Total 10.3x 10.5x 10.7x

PTM

(to Jan 16)

LTM

(to Jan 17)

PTM

(to Jan 16)

9.1x 13.9x 11.5x

10.3x 11.8x 10.0x

11.0x 11.7x 12.0x

11.0x 11.1x 10.7x

11.8x 8.9x 8.0x

15.6x 8.2x 11.2x

10.3x 15.7x 16.3x

9.8x 23.7x 8.6x

12.7x 18.4x 12.7x

10.7x 12.8x 14.2x

8.3x 8.7x 8.8x

6.2x 10.5x 15.4x

10.4x 10.5x 10.8x

9.1x 9.6x 9.3x

13.2x 11.8x 10.5x

6.4x 8.0x 10.3x

10.7x 11.2x 10.9x

LTM

(to Jan 17)

PTM

(to Jan 16)

15.5x 13.7x

9.1x 9.2x

10.1x 10.2x

8.8x 9.1x

8.7x 10.5x

9.5x 15.9x

8.9x 11.1x

13.3x 11.9x

10.2x 11.8x

9.2x 10.7x

9.7x 8.1x

5.6x 8.7x

8.3x 7.9x

9.6x 10.0x

10.1x 10.4x

7.2x 7.0x

9.3x 10.0x

Median bid premium to four-week stock price

LTM

(to Jan 17)

Global Americas Asia-Pacific EMEA

PTM

(to Jan 16)

LTM

(to Jan 17)

PTM

(to Jan 16)

LTM

(to Jan 17)

PTM

(to Jan 16)

LTM

(to Jan 17)

Aerospace and defense 31% 29% 48% 14% 22% 32% 29% -

PTM

(to Jan 16)

Automotive and

transportation

22% 12% 37% 18% 19% 11% 8% 11%

Consumer products and retail 18% 21% 27% 32% 15% 17% 17% 16%

Diversified industrial products 23% 18% 33% 24% 20% 17% 22% 26%

Financial services 22% 20% 30% 27% 15% 11% 15% 14%

Government and public sector 35% 22% 44% 23% 10% 21% 40% 16%

Health care 13% 18% 13% 30% 10% 10% 12% 24%

Life sciences 27% 18% 25% 32% 35% 16% - 2%

Media and entertainment 32% 23% 42% 37% 26% 19% 11% 16%

Mining and metals 22% 19% 26% 29% 21% 12% 23% 17%

Oil and gas 25% 23% 29% 28% 22% 18% 18% 32%

Other sectors 19% 24% 23% 27% 20% 20% 18% 22%

Power and utilities 27% 21% 31% 26% 22% 22% 28% 21%

Real estate 25% 13% 27% 15% 25% 14% 18%% 3%

Technology 24% 24% 38% 29% 18% 18% 15% 25%

Telecommunications 21% 15% 43% 26% 7% 15% 15% 12%

Total 23% 20% 31% 27% 18% 17% 17% 17%

Deal multiples greater than 30x and bid premium greater than 100% have been excluded from calculation of median.

M&A analysis as at 1 February 2017. Source: Dealogic. All Rights Reserved.

Note: data is continually updated and therefore subject to change.

23

Capital Briefing


Appendix D

Capital Confidence Barometer (October 2016): by area

Respondents who expect their company to pursue acquisitions in the next 12 months.

Global Americas EMEA

100%

100%

100%

75%

50%

40%

56%

59%

50%

57%

75%

50%

34%

57%

67%

54%

62%

75%

50%

30%

50%

48%

44%

47%

25%

25%

25%

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

Asia-Pacific China Germany

100%

100%

100%

75%

50%

57%

45% 44%

38%

47%

75%

50%

56%

43%

40%

43%

49%

75%

50%

51%

56%

50%

61%

28%

25%

25%

25%

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

Japan UK US

100%

100%

100%

75%

50%

68%

51%

43%

35%

61%

75%

50%

58%

52%

59%

48%

75%

50%

33%

61%

74%

57%

75%

25%

25%

16%

25%

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

0%

Oct 14 Apr 15 Oct 15 Apr 16 Oct 16

24

Private Equity Capital Briefing


Notes

25 Private Equity Capital Briefing


Notes

26 Private Equity Capital Briefing


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